HUMMINGBIRD MUSIC LTD v. DINO ACCONCI AND ANOTHER

HCA836/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 836 OF 2007

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Date of Hearing : 28 August 2007

Date of Ruling : 28 August 2007

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R U L I N G

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1.  This is a late application by the defendants, on the sixth day of the trial, to re-amend their defence and counterclaim.  Although a number of paragraphs are sought to be added, the proposed new plea finds its expression at paragraph 26(1)(vi) being part of the plaintiff’s alleged breaches of the first agreements with the defendants, which are said to have entitled the defendants to walk away from these contractual arrangements.  The plea is in these terms:-

“

The plaintiff failed to disclose to the defendants that at all material times Tam of the plaintiff is and was a shareholder and director of M.Bark Music Limited when the same was appointed as the plaintiff’s agent in the PRC.  Without knowledge or consent of the defendants Tan received for himself his 50 per cent share from M.Bark Music Limited, a secret commission calculated as 20 per cent of the gross performance income of the defendants in the PRC, which has not been paid over to the defendants.”

2.  Mr Sarony has been quite specific that these proposed amendments only give rise to a clean point of law as to whether the plaintiff had the duty, as a matter of law, to disclose to the defendants that Mr Chang Tan of the plaintiff was a shareholder and director of M.Bark Music Limited.  Certain facts and consequences from the failure to disclose are also pleaded, including the serious allegation that Mr Chang Tan had earned for himself a secret commission calculated at 20 per cent of the gross performance income of the defendants in the PRC.

3.  Mr C.Y. Li has taken the sharpest objection to the proposed amendments.  He says that they are far too late, they are unparticularised, and that if they are allowed that they would cause him and his clients considerable forensic embarrassment in having to marshal evidence to meet these allegations.  As to lateness, Mr Sarony says that it was only in the course of Mr Li’s opening that it was learnt that M.Bark was a Hong Kong company and not a PRC company; Mr Li had opened it as a PRC company, as Mr Sarony had assumed it was, until Mr Li was corrected about it by his instructing solicitors.

4.  It seems to me that by restricting himself to the assertion that he merely wishes to say that the plaintiff was under a duty to disclose the true facts about M.Bark that Mr Sarony has, to a great extent, made his passage an easier one but, even so, Mr Li must be free to meet this new plea in any way that he sees fit and by calling such further evidence that he considers will best serve his client.

5.  The real problem with these late applications for amendment - and this one raises a new issue - is that the party responding, instead of concentrating on the current pleaded issues, is forced to divert its energies to meet new challenges to its case.  The law reports are full of cases where the court has refused late amendments of this sort.  Plainly, I have a discretion in this matter.  This trial, I am afraid, is going slower than everybody had expected and I would have thought is certain to overrun.  I do not believe that this is due to counsel or the witnesses dragging their feet; the problem stems from the difficulty of estimating time for a trial of this sort.  It was put down as a speedy trial and eight days was thought to be sufficient. 

6.  I mention this because Mr Li says that if I allow the amendment it is bound to disrupt the trial further because he will need to call new evidence.  I accept that where the new plea is restricted, in the way that Mr Sarony has asserted - and he does not intend to call further evidence - Mr Li, nevertheless, may well have to.  All of this having been said, potentially the issue raised by the new plea may be one of importance, and where I am comfortable with the notion that - even given the constraints of time imposed on him - Mr Li and his solicitors will be able to deal with the factual basis of the new plea without too much difficulty and really for that reason I propose to allow the amendment, which, as is accepted, must be one which will be with costs.

(Proceedings not required)

Court adjourns - 12.39 pm

Court resumes - 2.31 pm

Appearances as before.

7.  When I allowed the defendants to re-amend their defence and counterclaim, this was predicated on the basis that the plaintiff would in fact be able to cope with the amendments without the necessity for an adjournment.  It seems to me, in now approaching this application by Mr Li for an adjournment, I need to be loyal to that ruling and my reasons for it; I have got to be consistent.  But Mr Li is now applying, really, on the basis that, firstly - and I think this is the most important ground which he relies on - that at present he and his client are operating in the dark because they have got to go off and look at the accounts again, and this at a time when his main witness, Mr Chang Tan is giving evidence.  Whilst the trial process can deal with that perfectly comfortably by, of course, allowing Mr Li to interview his witness in the course of his evidence, limited to these sort of matters, Mr Li says that it is not just Mr Chang but it is a number of other witnesses who need to be approached to deal with this.  There are existing witnesses and he refers, for instance, to Miss Sybil Mak, who has already given evidence and she may need to be approached to give further evidence about this matter: Miss Poon, who dealt with the accounts, she is yet to give evidence and she needs to be approached to see what she might say, and Mr Li says “I don’t know what she is going to say about these matters so I’ll be examining Mr Chang in the dark without knowing what my other witnesses are to say.”  And he has also raised the prospect of perhaps having to call other witnesses to deal with limited matters on this aspect.

8.  Mr Sarony, before the midday adjournment, was perhaps more sympathetic to the idea of the matter being adjourned.  One can see the advantage of adjourning now to the extent of allowing all of this information to be investigated, so that on the resumed date everyone knows precisely where they are and they know where their evidence stands in respect of these issues, but on the other hand, I have given leave in respect of quite a limited feature here, which one needs to not lose sight of, which is whether there is a duty cast on the plaintiff to have informed the defendants of the fact that Mr Chang Tan was a director and shareholder of M.Bark.  But as I have already made clear, and this is accepted by Mr Sarony, that must not prevent Mr Li from meeting this allegation by looking at the matter perhaps more widely and by considering the accountancy evidence and all the other matters which bear on the activities of M.Bark, with particular reference to a concert which was performed by the defendants on behalf of the Budweiser company on the mainland.

9.  A number of matters always bear in respect of any application for an adjournment.  A very important one is of course that this is not the only case in the list and the proper administration of justice requires that the cases should be dealt with as efficiently as possible and that time estimates should be adhered to if at all possible.  The fact that this does not happen on a great many occasions is a reflection of the fact that estimating the length of a trial is not a science and time estimates are very difficult to predict correctly, they are only estimates. 

10.  This case was estimated to last eight days by the judge who dealt with the injunction application and all he was doing was his best based on the material before him.  It was then thought a very good idea that this should be dealt with expeditiously, that the trial should take place in the long vacation, and so we have come along at least a year before the case would normally be expected to come on for trial when perhaps better estimates would have been provided as the course of the interlocutory process unwound and as more and more discovery took place and more and more documents emerged.  We can see that this is happening now; the defendants have produced what I am told is their fourth list of documents.  They are asking for more discovery from the plaintiff.  And Mr Li relies on all of this: he says “as I’m dealing with the evidence of my main witness I’m also having to cope with these sort of requests and not knowing what’s going on and how the defendants might put their case in respect of documents that are emerging.”

11.  As matters presently stand, tomorrow is the last day of the eight.  We have lost one because of my ill health yesterday.  I have been able to provide another two, Thursday and Friday of this week, and I have got to consider what the effect of all of this is.  I agree with Mr Li; I do not think that all of Mr Chang’s evidence can be completed - I am sure Mr Li will be able to complete all the other aspects of the evidence that he would have wished to and that Mr Sarony may well complete his cross-examination of the witness and we might be able to start another witness - perhaps Miss Poon - and then we would have to go over for further dates in any event. 

12.  I am told that as matters presently stand if we do not take advantage of the next three days really - it is now 3 o’clock so, effectively, most of the day is gone - we are going to need another 10 days - I think that is probably right. Reluctantly I have come to the view that the safer course is to say that this case ought to be adjourned today.  I do not like to do this.  As I say, cases are fixed and other parties’ interests are involved and so now we are going to take up 10 further days in respect of time which could be used by other cases, but I think on this occasion it is unavoidable and it largely goes back to the fact that these are the risks that one has to recognise when the court orders a speedy trial. I respectfully agree with Andrew Cheung J that this appeared to be the right course to take.   But people have had to operate under pressure.  Both parties accepted that it would be a good thing to have a speedy trial. 

13.  Now we have got our speedy trial it is going to turn out to be a rather more slow trial.  I do not know when we are going to be able to get back, it will be months rather than weeks before we return but I hope that by then everything will be in order.  It also gives the parties an opportunity to see some sense, and I desire to say this; these are commercial decisions to be made by both of them, on the one hand the defendants have a future career to develop and on the other the plaintiff, which is still quite a new player in this highly competitive field, I am sure, if the matter could be resolved properly, would  like to get shot of this litigation and at least this gives an opportunity.  So, reluctantly, I have come to the view that Mr Li is probably right.  It is the most practical course to take.  I do not think very much more could be achieved in the remaining days anyway, and as matters have turned out, eight days was never going to be sufficient, and that is certainly not a criticism of Andrew Cheung J.  I think, looking at it from his perspective, he already had a pretty good feel for the matter, eight days seemed pretty reasonable but it has turned out to be wholly inadequate. 

14.  I do not actually think, as I said in the course of my ruling this morning, I do not think counsel or the witnesses have been dragging their feet.  The case has been going perfectly reasonably save for the misfortune with my health yesterday and I think we have been achieving a reasonable pace in all of the circumstances.  So it is now going to go over for 10 days to be fixed in consultation with counsel’s diaries. 

(Discussion re further directions)

15.  I release counsel with my thanks and will see the solicitors at half past 9 then you will be able to tell me what directions you want made.